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FERC issues show-cause orders to six grid operators on AI data center power connections

· by Pondero Newsdesk

The short version

The Federal Energy Regulatory Commission voted 5-0 on June 18 to order all six major U.S. regional transmission organizations to justify or revise their rules for connecting large AI data centers to the grid.

FERC issues show-cause orders to six grid operators on AI data center power connections

On June 18, the Federal Energy Regulatory Commission voted 5-0 to issue tailored show-cause orders to PJM Interconnection, MISO, Southwest Power Pool, CAISO, ISO New England, and NYISO. Each of the six major regional transmission organizations must now justify or revise its interconnection rules for large-load customers, including AI data centers.

What

Approved unanimously at FERC's open meeting, the orders cover grid operators serving roughly 200 million Americans across more than 30 states and the District of Columbia. Under the orders, each operator must file a reliability report within 30 days on how it will ensure adequate generating capacity for existing and new large loads. Within 60 days, each must either justify why its current tariff structures remain fair to all customers, or propose specific reforms, per FERC's official announcement.

Five areas were flagged for action: faster interconnection study processes; greater transparency into transmission costs; rules for co-location and behind-the-meter generation; new transmission services for flexible large loads; and study processes for generation facilities serving nearby large loads. One provision directly protects electricity customers: the commission barred grid operators from spreading AI infrastructure connection costs across ordinary ratepayers, placing those costs on developers instead.

FERC Chair Laura Swett, one of three Republicans on the commission, said the orders were "charting new territory and setting the standard for how America will responsibly and efficiently integrate large energy loads into the bulk electric grid while protecting consumers," per TechTimes reporting. Energy Secretary Chris Wright directed FERC to launch this rulemaking effort in October 2025.

Why it matters

Grid access, not electricity supply, is what these orders target. Pending interconnection requests across U.S. grids stood at approximately 2,290 gigawatts as of end of 2024, a backlog that has stalled AI infrastructure projects even as demand climbs. Requiring all six major operators to respond on the same timeline means federal policy now drives a coordinated process rather than a fragmented one that varies by region.

Among the provisions, the expanded co-location framework carries the most practical weight. Co-location arrangements let a data center connect directly to a power generation facility behind the meter, bypassing the shared transmission queue entirely. FERC cited the Southwest Power Pool's High Impact Large Load initiative as a potential national model. Until now, PJM was the only operator with formal co-location guidance, following a December 2025 FERC order. All six now operate under the same framework.

Rob Gramlich, president of consulting firm Grid Strategies, told TechTimes the commission "went right up to the line of its jurisdiction," stopping short of pushing into state retail rate-setting territory. States retain control over the retail rates large customers ultimately pay; FERC's reach extends to transmission rules and interconnection processes.

What to watch next

Mid-July 2026 is when the 30-day reliability filings land. From there, the key question is whether FERC converts the 60-day reform responses into binding rulemaking with enforceable timelines, or whether the filings open a second round of negotiation. Any operator claiming its existing tariffs are already adequate faces commissioners who voted 5-0 that the current situation required this level of intervention.

Sources